Hong Kong to spend $15.4 billion to stabilise Covid-ravaged economy

Hong Kong will introduce 120 billion Hong Kong dollars (USD 15.4 billion) in fiscal measures to help businesses and residents impacted by the coronavirus pandemic, as it looks towards economic growth later this year following a recession in 2020.

The measures which include tax relief, loans for the unemployed and consumption vouchers are aimed at stabilizing the economy, Hong Kong Finance Minister Paul Chan said in a budget speech Wednesday. He forecast the economy is set to grow 3.5 per cent to 5.5 per cent this year, compared to the economic contraction of 6.1 per cent in 2020.

The budget for 2021 aims to alleviate the hardship and pressure caused by the economic downturn and the epidemic, Chan said.

Unemployed residents can get loans capped at 80,000 Hong Kong dollars (USD 10,300) in a programme that postpones payments for the first year and charges 1 per cent interest. The measures come after Hong Kong last week reported a 7 per cent jobless rate between November and January, the highest since April 2004.

Vouchers worth 5,000 Hong Kong dollars (USD 645) will also be issued in installments to residents to boost consumption. Businesses and individuals will also receive tax relief.

Chan said that Hong Kong's fiscal deficit is at a record high, after the government last year spent 300 billion Hong Kong dollars (USD 38.7 billion) on supporting measures, including a cash handout to residents and wage subsidies for businesses.

He also said that mainland China's economy was fundamentally sound despite uncertainties from the epidemic and in US-China relations. Hong Kong, as a semi-autonomous Chinese city, will benefit from this.

In the medium term, Hong Kong will continue to benefit from the ongoing development of the mainland and the shift in global economic gravity from West to East, Chan said.